Do you feel very excited because you are getting your own Federal Way Real Estate property soon? For sure, visiting Federal Way Homes for Sale that you found on various Federal Way MLS or Multiple Listing Services online might give you thrill and excitement. However, do not hurry the process if you know that you had not considered yet all the important matters that may affect your home buying experience. Applying for a mortgage is one of the most significant stages when purchasing a home particularly if you know you cannot support it financially using your own money. You should give attention to what type of mortgage you should get when you apply for a home loan. There are various kinds of home loan and one of the most popular loans that lending officer might suggest you to get is the fixed-rate. This type of loan uses the same interest rate and monthly payment throughout the entire life of the mortgage. Usually, this loan uses a thirty-year amortization, making it easier for homebuyers to handle the financing because it requires lesser monthly payments. You can also choose the fifteen-year loan program but it will require you to give higher monthly payments because it has lesser number of years for loan payment.
Pros of fixed-rate mortgage
One of the most visible advantages of this kind of loan is that your monthly payment will remain constant for the whole amortization period. Borrowers do not have to worry about the condition of the real estate market. Even if the market trend changes, making it not in favor of the homebuyers, your loans interest rate will not change at all. Basically, the fixed-rate mortgages are very simple and it will give you no trouble at all. Government programs such as the FHA and the VA loans even prefer the fixed-rate loans because of its stability of the payment rate.
Cons
You will also realize that there are disadvantages to this kind of loan. One of which is the interest rates that tends to be higher than any other loan type. There are even homebuyers that pay the premium to lock in the fixed mortgage rate. In an adjustable rate mortgages, the borrowers can use some discount for it.
There are homebuyers that fail to refinance the loan they got especially if there is a favorable condition to do it. Part of their reason is that they are very focused on the low fixed rate they are getting and they are afraid to lose them when they try refinancing. However, there are instances that refinancing to an adjustable-rate loan can be more rewarding.
It will help you a lot if you consider firs the advantages and disadvantages of getting a fixed-rate loan. This will give you more chance to make better decisions when making financing plans for this endeavor. Buying a home is a long-term investment and it is only right that you are comfortable with the payments terms you decided to use for your loan.